QUESTION 1

1. Pro-forma means budgeted.

   True

   False

QUESTION 2

1. Manufacturing overhead costs for the budget would include factory utility costs, but not sales supervisors salaries.

   True

   False

QUESTION 3

1. An income statement prepared under absorption costing is the method required for external reporting, when adhering to IFRS.

   True

   False

QUESTION 4

1. The denominator level, is a level of activity that is derived in the static budget.

   True

   False

QUESTION 5

1. The only difference between the static budget and flexible budget, is that the static budget is prepared using planned output.

   True

   False

QUESTION 6

1. The denominator level is the quantity of the allocation base used to allocate fixed overhead costs to a cost object in developing a budgeted fixed overhead rate.

   True

   False

QUESTION 7

1. The revenue budget and budgeted statement of income are not necessary to prepare the budgeted balance sheet and budgeted statement of cash flows.

   True

   False

QUESTION 8

1. Lyman Co. has a production schedule of 18,000 units and a budgeted sales volume of 20,000 units for the current year. In addition, 4,000 units are in beginning finished goods inventory. Therefore, 14,000 units are targeted for ending finished goods inventory.

   True

   False

QUESTION 9

1. The production-volume variance is favourable when actual outputs do not exceed the denominator level.

   True

   False

QUESTION 10

1. The direct materials usage budget is not based on direct materials purchased.

   True

   False